Tax in India

Taxes in India-

Article 265 :-“No tax shall be levied or collected except by the authority of law."

Tax levied or collected Laws are passed in Parliament or the State Legislature.

Taxes are levied by the Central Government , State Governments &

Local Authorities  ( Municipality)

Income taxes are a source of funds that the government uses in its activities and

serve the people of India.

The levy is governed by the Income Tax Act, 1961. The Income Tax Department is

governed by CBDT and is a part of the Department of Revenue under the 

Ministry of Finance, Govt. of India.

The government of India imposes an income tax on taxable income of

all persons including individuals, Hindu Undivided Families (HUFs), companies,

firms, association of persons, and body of individuals, local authority and any other

artificial judicial person

Five heads of Income:-

1)     Income from salaries:-

2)     Income from house property:-

3)     Profits and gains of business or profession:-

4)     Income from Capital gain :-

5)     Income from other sources

Introduction:-

1)     Income from salaries:-Salary is an amount of money or compensation

received   to employee from its employer for his services or it is a returns for

work performed during the employment period.

2)     Income from house property :-The assessee should be owner of the

property.  The property should consists of any building or lands appurtenant

thereto is taxable as property income under this head, rental income from

vacant land or plot is taxable under the head “Income from other sources”

3)     Profits and gains of business or profession:- Business :-An activity of

purchase and sales with intention of making profit.

Business includes any trade, commerce or manufacture or any adventure or c

oncern in the nature of trade, commerce or manufacture. 

Income earned from any profession or vocation which involves the

occupation requiring intellectual skill or manual skil  E.g. Doctor, Lawyer etc, is 
taxable under this head.

Vocation is an activity, which requires a special skill, which is used to earn i

ncome. e.g. Painter, Singer etc.

4)Income from Capital gain :-Any profit or gains arising from the sale or

           transfer of  capital assets is chargeable to tax under the head of “Capital      

           gains”

5) Income from other sources :-A source of income which does not specifically

fall under any one the above four heads of income (ie. Income from salary;

Income from house property; income from Profits and gains of Business or

Profession & Income from Capital gains)